“A privatization of the justice system” is what the New York Times called the increasing use by corporations of arbitration clauses in contract agreements as a way to sidestep the court system. These are clauses that force the signer of the agreement to use arbitration by privately appointed individuals or arbitrators to solve disputes. Nursing homes have used forced arbitration in hundreds of cases where residents and their families would have sued the elder care facilities for neglect and brutal abuse. Arbitration keeps disputes about safety and the quality of care out of public view.
As of September, that’s history. The U.S. government has just moved to prevent nursing homes from forcing residents and their families to go to arbitration with serious claims such as elder abuse, sexual harassment and even wrongful death. The Health and Human Services Department has issued a rule that bars any nursing home that receives federal funding from requiring that its residents resolve any disputes in arbitration, instead of court. The rule does not require congressional approval, and will only apply to new patient admissions.
The agency controls the more than $1 trillion in Medicare and Medicaid funding upon which nursing homes depend. The new rule will affect 1.5 million people currently residing in nursing homes. The nursing home industry argues that permitting lawsuits could drive up costs, force some homes to close, and take away a less costly alternative to going to court. Many people, including patient advocacy groups, believe that arbitration clauses in nursing home contracts are unfair because people sign them when they don’t understand them or even know they exist.
The new rule followed the widely covered case of the killing of a 100-year-old nursing home resident, Elizabeth Barrow, by her 97-year-old roommate (now aged 102), who was judged to be unfit to stand trial. The Massachusetts appeals court ruled that Barrow’s son, who had signed the agreement with the arbitration clause, could seek redress in court for her murder. The case was seen as a critical test of a legal way to prevent nursing homes from forcing residents to go to arbitration, where there is no judge or jury and the proceedings are hidden from the public.